Shell Oil's tax credit is different than subsidy

Sanjay Paul asked a simple question in the "Wrapped up in free-market capitalism" op-ed (June 17): If the federal government is wrong to provide subsidies to a solar-energy firm, how is it right for the state government to offer subsidies to an oil firm?

Well, the answer is really quite simple.

The subsidy offered to Solyndra (the most glaring of such subsidies) was a loan guarantee that will cost the U.S. taxpayer more than $500 million, money that was taken from taxpayers, laundered through the federal bureaucracy and directed to well-connected cronies based as much on political as economic considerations. It was the very definition of using other people's money for your own political gains or agenda.

Shell, meanwhile, will use stockholder money and after-tax profits, invest millions of dollars up front, create thousands of jobs and infuse millions of dollars into the economy through taxation of the new job holders, their purchases, home sales and all the economic activity associated with a resident holding a well-paying job.

Only after all that investment has been made will they, ultimately, reap a subsidy when it comes time to pay taxes.

So, to professor Paul, the answer to his question is that, while he wants to be able to influence the spending of OPM to suit his agenda, Shell will be taking the risk with its own money.

A tax credit is not a subsidy, for it only becomes effective once an investment creates an asset or a profit. Not one dime will be transferred from a state account to Shell.